In the early 2000s, Ecuador replaced its currency, the sucre, with the U.S. dollar as its official currency. What would prompt a country to abandon its own currency and adopt the currency of the United States?
A)With dollars, monetary policy will be better able to offset shock to the economy.
B)Adopting the dollar will bring inflation under control, which will aid economic growth.
C)In making the transition to dollars, corrupt government officials are able to amass tremendous fortunes.
D)Adopting the dollar will result in the elimination of U.S. tariffs on exports from Ecuador to the United States.

Question

Quizplus · Accepted Answer

Adopting a stable foreign currency like the U.S. dollar can help a country control hyperinflation by anchoring its economy to the stability and international confidence in the dollar, thereby aiding in economic growth.

In the Early 2000s, Ecuador Replaced Its Currency, the Sucre